#RiskRewardRatio The Risk-Reward Ratio is a key concept in trading and investing that compares the potential profit of a trade to its potential loss. It's calculated by dividing the amount a trader stands to lose if the price moves in an unexpected direction (risk) by the amount they stand to gain if the trade goes as planned (reward). For example, a risk-reward ratio of 1:3 means risking $1 to potentially earn $3. Successful traders often aim for favorable ratios to ensure that even with a lower win rate, they can remain profitable over time. #RiskRewardRatio is vital for disciplined trading.